On October 10, 2024, the Federal Trade Commission (“FTC”) published the final version of changes affecting Hart-Scott-Rodino (“HSR”) reporting requirements, which were the subject of a previous Notice of Proposed Rulemaking. The new HSR rules will take effect in mid-January 2025 (90 days after the official publication in the Federal Register), impacting all HSR-reportable transactions where the parties will be submitting their respective HSR filings on or after the effective date.
A detailed summary of the final rulemaking is forthcoming from Dechert’s antitrust/competition group. Key changes that will significantly impact the burden on most filing parties include the following:
- Expanding the relevant custodians for providing transaction-related documents analyzing competition beyond officers and directors, to include the supervisor of each merging party’s deal team;
- Requiring the submission of certain ordinary course documents related to competition, market shares, competitors, or markets for products and services where the filing parties overlap;
- Adding new disclosure obligations relating to products or services that are in development;
- Requiring sellers to disclose prior acquisitions in the same or related lines of business;
- Increasing the amount of required disclosure regarding investors in the buyer and other entities in the same ownership chain, including limited partners with board/management rights;
- Increasing the requirements on filings made off of letters of intent or similar preliminary agreements to now require a draft agreement, term sheet, or other dated document containing certain material terms of the transaction;
- Mandating disclosure of foreign subsidies, as required by Congress pursuant to the Merger Filing Fee Modernization Act of 2022; and
- Requiring the translation of foreign language documents.
The FTC also modified or abandoned certain proposals in response to comments received from Dechert and other members of the public, such as:
- Narrowing the scope of limited partner disclosures (which the FTC noted was in response to the Comment submitted by Dechert’s antitrust/competition group);
- Limiting the amount of required information to be disclosed regarding directors and officers, and eliminating the proposal to disclose positions held by board observers;
- Removing the requirement to submit the draft forms of documents; and
- Not adopting many of the labor-related requirements.
The FTC also confirmed that that the “temporary” suspension of grants of early termination of the initial HSR waiting period (that has been in place since February 2021) will be lifted once the new rules become effective. The current e-filing platform that has been utilized since March 2020 will remain in place until further notice, as the FTC continues to develop a new interface.
